Exhibit 10.1

                         Receivable Factoring Agreement

FACE  AMOUNT                                        $695,000
INTEREST  RATE                                      3.5%  per  month
ISSUANCE  DATE                                      May  17,  2006
MATURITY  DATE                                      July  17,  2006

     FOR  VALUE  RECEIVED,  Xtreme  Companies,  Inc.,  a Nevada corporation (the
"Company"),  (OTC  BB:  NWKI)  hereby  promises to pay DUTCHESS PRIVATE EQUITIES
FUND,  II,  L.P.  (the  "Holder")  by  July  17,  2006 (the "Maturity Date"), or
earlier,  the Face Amount of Six Hundred Ninety-Five Thousand dollars ($695,000)
U.S.,  plus  accrued  interest, in such amounts, at such times and on such terms
and  conditions  as  are  specified  herein.

Article  1     Method  of  Payment/Interest

          The  Company  shall  pay  three  and  one-half  percent (3.5%) monthly
coupon,  compounded  daily,  on  the  unpaid  Face  Amount, pro rata for partial
periods.  The  Company  shall pay a minimum of one month's interest on the funds
("Minimum  Interest")  to  the  Holder.

Section  1.2  Prepayment

The  Company  shall  make  mandatory  payments to the Holder as the funds become
available  from  the  boats listed below in Exhibit A ("Collateral Receivables")
(attached  hereto  and  incorporated  by  reference).  The  Company  shall  make
immediate  payment  to  the Holder within one (1) day, via wire transfer, to the
Holder's  account  for  the  Face Amount plus accrued interest and penalties, if
any.

The  Company  may  make additional payments ("Prepayment") without any penalties
provided  the  Minimum  Interest  is  paid.

Article  2        Collateral

     The  Company  will  deliver  the  assigned  receivables, attached hereto as
Exhibit A and incorporated by reference, due to the Company and its wholly owned
subsidiary  Marine  Holdings  d/b/a  Challenger  Offshore.  The  Company  shall
immediately  make  payment  to the Holder on ANY funds received from the vendors
listed  on  Exhibit  A.

Article  3        Unpaid  Amounts

     In  the event that on the Maturity Date, there is an outstanding balance on
the  Face  Amount, the Holder can exercise its right to increase the Face Amount
by ten percent (10%) per month for each month that the Agreement remains unpaid,
compounded  daily, pro rata for partial periods. The Company shall also continue
to  pay  the  interest  rate  outlined in this Agreement.  If the aforementioned
occurs,  the  Company  will be in Default and remedies as described in Article 4
may  be  taken  at  the  Holder's  discretion.

Article  4     Defaults  and  Remedies

     Section  4.1     Events  of Default. An "Event of Default" occurs if any of
the  following  occur:

     (a)     the  Company  does  not make the Payment on the Face Amount of this
Agreement within two (2) business days of the Maturity Date, as applicable, upon
receipt  of  Collateral  or  otherwise;  or
(b)     the Company, pursuant to or within the meaning of any Bankruptcy Law (as
hereinafter  defined):  (i)  commences  a  voluntary  case; (ii) consents to the
entry  of  an order for relief against it in an involuntary case; (iii) consents
to  the  appointment of a Custodian (as hereinafter defined) of it or for all or
substantially  all  of  its  property;  (iv)  makes a general assignment for the
benefit  of  its  creditors;  or (v) a court of competent jurisdiction enters an
order  or  decree  under any Bankruptcy Law that:  (A) is for relief against the
Company  in  an involuntary case; (B) appoints a Custodian of the Company or for
all  or  substantially all of its property; or (C) orders the liquidation of the
Company,  and  the order or decree remains unstayed and in effect for sixty (60)
calendar  days;  or
(c)     the  Company's  $0.001  par  value  common stock (the "Common Stock") is
suspended  or  is  no  longer  listed  on  any recognized exchange, including an
electronic over-the-counter bulletin board, for in excess of two (2) consecutive
trading  days;  or
(d)     any  of  the  Company's  representations or warranties contained in this
Agreement  were  false when made and such failure continues for a period of five
(5)  business  days;  or,
(e)     the  Company  breaches  any covenant or condition of this Agreement, and
such  breach,  if  subject  to cure, continues for a period of five (5) business
days.

     As  used  in  this Section 4.1, the term "Bankruptcy Law" means Title 11 of
the  United  States  Code  or any similar federal or state law for the relief of
debtors.  The term "Custodian" means any receiver, trustee, assignee, liquidator
or  similar  official  under  any  Bankruptcy  Law.

     Section 4.2     Remedies.  In the Event of Default, the Holder may elect to
secure  a  portion of the Company's assets not to exceed 200% of the Face Amount
of  the  Agreement,  including,  but  not limited to: accounts receivable, cash,
marketable  securities,  equipment, building, land or inventory.  The Holder may
also  elect  to  garnishee Revenue from the Company in an amount that will repay
the  Holder  on  the  schedules  outlined  in  this  Agreement.

     For  EACH  Event  of Default, as outlined in this Agreement, the Holder can
          ----
exercise  its  right to increase the Face Amount ten percent (10%) as an initial
penalty.  In addition, the Holder may elect to increase the Face Amount by three
percent  (3%)  per month paid as a penalty for Liquidated Damages.  The Liquated
Damages  will  be  compounded daily.  It is the intention and acknowledgement of
both  parties  that  the  Liquidated  Damages  not  be  deemed  as  interest.

     In  the  event of a Default hereunder, the Holder shall have the right, but
not  the  obligation,  to  1)  switch  the  Residual  Amount  to  a  three-year
("Convertible  Maturity  Date"),  fifteen  percent  (15%)  interest  bearing
convertible  debenture  at  the terms described in Section 4.2 (the "Convertible
Debenture").  At  such  time  of  Default,  the  Convertible  Debenture shall be
considered  closed  ("Convertible  Closing  Date").  If  the  Holder  chooses to
convert  the  Residual Amount to a Convertible Debenture, the Company shall have
twenty  (20)  business days after notice of the same (the "Notice of Convertible
Debenture")  to file a registration statement covering an amount of shares equal
to  three  hundred  percent  (300%)  of  the  Residual Amount. Such registration
statement  shall  be  declared  effective  under  the Securities Act of 1933, as
amended  (the  "Securities Act"), by the Securities and Exchange Commission (the
"Commission") within forty (40) business days of the date the Company files such
Registration  Statement.   In  the  event  the  Company  does  not  file  such
registration  statement  within  twenty  (20)  business  days  of  the  Holder's
request,  or such registration statement is not declared by the Commission to be
effective  under the Securities Act within the time period described above , the
Residual  Amount  shall  increase by five thousand dollars ($5,000) per day.  In
the  event  the Company is given the option for accelerated effectiveness of the
registration  statement,  it  agrees  that  it  shall  cause  such  registration
statement  to  be  declared effective as soon as reasonably practicable.  In the
event  that the Company is given the option for accelerated effectiveness of the
registration  statement, but chooses not to cause such registration statement to
be  declared  effective  on  such  accelerated  basis, the Residual Amount shall
increase  by  five  thousand dollars ($5,000) per day commencing on the earliest
date  as  of  which  such  registration statement would have been declared to be
effective  if  subject  to  accelerated  effectiveness.

     Section  4.3     Conversion  Privilege

     (a)     The  Holder  shall  have  the  right  to  convert  the  Convertible
Debenture  into  shares  of  Common  Stock at any time following the Convertible
Closing  Date  and  which  is  before  the  close of business on the Convertible
Maturity  Date.  The  number  of  shares  of  Common  Stock  issuable  upon  the
conversion  of the Convertible Debenture shall be determined pursuant to Section
4.3,  but the number of shares issuable shall be rounded up or down, as the case
may  be,  to  the  nearest  whole  share.

     (b)     The  Convertible Debenture may be converted, whether in whole or in
part,  at  any  time  and  from  time  to  time.

     (c)     In  the  event  all  or  any  portion  of the Convertible Debenture
remains  outstanding  on  the Convertible Maturity Date (the "Debenture Residual
Amount"),  the  unconverted  portion  of  such  Convertible  Debenture  will
automatically  be  converted  into  shares  of  Common Stock on such date in the
manner  set  forth  in  Section  4.3.

     Section  4.4     Conversion  Procedure

     (a)     The  Residual Amount may be converted, in whole or in part any time
and  from time to time, following the Convertible Closing Date.  Such conversion
shall  be  effectuated  by  surrendering  to  the  Company, or its attorney, the
Convertible  Debenture  to be converted together with a facsimile or original of
the  signed  notice  of  conversion  (the "Notice of Conversion").   The date on
which  the Notice of Conversion is effective ("Conversion Date") shall be deemed
to  be  the date on which the Holder has delivered to the Company a facsimile or
original of the signed Notice of Conversion, as long as the original Convertible
Debenture(s)  to  be  converted  are  received  by  the  Company within five (5)
business  days thereafter.  At such time that the original Convertible Debenture
has  been  received by the Company, the Holder can elect to whether a reissuance
of the Convertible Debenture is warranted, or whether the Company can retain the
Convertible  Debenture  as  to  a  continual  conversion  by  the  Holder.
Notwithstanding  the  above,  any Notice of Conversion received by 4:00 P.M. EST
shall  be deemed to have been received the following business day (receipt being
via  a  confirmation  of  the  time  such facsimile to the Company is received).

     (b)     Common  Stock  to  be  Issued.     Upon  the  conversion  of  any
Convertible  Debentures  and  upon  receipt  by the Company or its attorney of a
facsimile  or  original of the Holder's signed Notice of Conversion, the Company
shall  instruct  its  transfer  agent  to  issue  stock  certificates  without
restrictive  legends  or  stop  transfer  instructions,  if  at  that  time  the
aforementioned registration statement described in Section 4.1 has been declared
effective  (or with proper restrictive legends if the registration statement has
not  as  yet  been declared effective), in such denominations to be specified at
conversion  representing the number of shares of Common Stock issuable upon such
conversion,  as  applicable.   In  the event that the Debenture is aged one year
and  deemed  sellable  under  Rule  144,  the  Company  shall,  upon a Notice of
Conversion,  instruct  the  transfer  agent  to  issue free trading certificates
without  restrictive  legends, subject to other applicable securities laws.  The
Company  is responsible to provide all costs associated with the issuance of the
shares,  including  but  not  limited  to  the  opinion  letter,  FedEx  of  the
certificates  and any other costs that arise. The Company shall act as registrar
and  shall  maintain  an appropriate ledger containing the necessary information
with  respect  to  each  Convertible  Debenture.  The  Company  warrants that no
instructions, other than these instructions, have been given or will be given to
the  transfer  agent and that the Common Stock shall otherwise be freely resold,
except  as  may  be  set  forth  herein  or  subject  to  applicable  law.

     (c)     Conversion  Rate.  Holder  is  entitled  to  convert  the Debenture
Residual  Amount  ,  plus  accrued  interest,  anytime following the Convertible
Maturity  Date,  at  the lesser of (i) fifty percent (50%) of the lowest closing
bid price during the fifteen (15) trading  immediately preceding the Convertible
Maturity  Date  or (ii) 100% of the lowest bid price for the twenty (20) trading
days  immediately  preceding  the  Convertible  Maturity Date ("Fixed Conversion
Price").   No  fractional  shares or scrip representing fractions of shares will
be  issued  on conversion, but the number of shares issuable shall be rounded up
or  down,  as  the  case  may  be,  to  the  nearest  whole  share.

     (d)     Nothing  contained  in the Convertible Debenture shall be deemed to
establish  or  require the payment of interest to the Holder at a rate in excess
of  the  maximum rate permitted by governing law.  In the event that the rate of
interest  required  to  be  paid exceeds the maximum rate permitted by governing
law,  the rate of interest required to be paid thereunder shall be automatically
reduced  to  the  maximum rate permitted under the governing law and such excess
shall  be  returned  with  reasonable  promptness  by the Holder to the Company.

     (e)     It  shall  be  the  Company's  responsibility to take all necessary
actions and to bear all such costs to issue the Common Stock as provided herein,
including  the  responsibility and cost for delivery of an opinion letter to the
transfer  agent,  if  so  required.  Holder shall be treated as a shareholder of
record  on  the  date  Common Stock is issued to the Holder. If the Holder shall
designate  another  person  as  the  entity  in  the  name  of  which  the stock
certificates  issuable  upon  conversion  of the Convertible Debenture are to be
issued  prior  to the issuance of such certificates, the Holder shall provide to
the  Company evidence that either no tax shall be due and payable as a result of
such  transfer  or  that  the applicable tax has been paid by the Holder or such
person. Upon surrender of any Convertible Debentures that are to be converted in
part, the Company shall issue to the Holder a new Convertible Debenture equal to
the  unconverted  amount,  if  so  requested  in  writing  by  the  Holder.

     (f)     Within  five  (5)  business days after receipt of the documentation
referred  to  above in Section 4.2, the Company shall deliver a certificate, for
the number of shares of Common Stock issuable upon the conversion.  In the event
the  Company  does not make delivery of the Common Stock as instructed by Holder
within  five (5) business days after the Conversion Date, then in such event the
Company  shall pay to the Holder one percent (1%) in cash of the dollar value of
the Debenture Residual Amount remaining after said conversion, compounded daily,
per  each  day  after the fifth (5th) business day following the Conversion Date
that  the  Common  Stock  is  not  delivered  to  the  Purchaser.

     (g)     The  Company  acknowledges  that  its failure to deliver the Common
Stock  within  five  (5)  business days after the Conversion Date will cause the
Holder  to  suffer  damages  in  an  amount that will be difficult to ascertain.
Accordingly,  the  parties  agree  that  it  is  appropriate  to include in this
Agreement  a provision for liquidated damages  The parties acknowledge and agree
that  the  liquidated damages provision set forth in this section represents the
parties' good faith effort to quantify such damages and, as such, agree that the
form  and  amount  of  such  liquidated  damages  are  reasonable  and  will not
constitute  a  penalty.  The payment of liquidated damages shall not relieve the
Company  from  its obligations to deliver the Common Stock pursuant to the terms
of  this  Convertible  Debenture.

     (h)     The Company shall at all times reserve (or make alternative written
arrangements  for  reservation or contribution of shares) and have available all
Common  Stock necessary to meet conversion of the Convertible Debentures  by the
Holder  of  the entire amount of Convertible Debentures then outstanding. If, at
any time the Holder submits a Notice of Conversion and the Company does not have
sufficient authorized but unissued shares of Common Stock (or alternative shares
of  Common Stock as may be contributed by stockholders of the Company) available
to  effect,  in  full, a conversion of the Convertible Debentures (a "Conversion
Default,"  the  date of such default being referred to herein as the "Conversion
Default  Date"),  the  Company  shall  issue  to the Holder all of the shares of
Common  Stock  which  are  available,  and  the  Notice  of Conversion as to any
Convertible  Debentures  requested  to  be  converted  but  not  converted  (the
"Unconverted  Convertible Debentures"), may be deemed null and void upon written
notice  sent  by the Holder to the Company.  The Company shall provide notice of
such  Conversion  Default  ("Notice  of  Conversion  Default") to the Holder, by
facsimile  within  three  (3)  business  days of such default (with the original
delivered  by  overnight  mail  or  two  day courier), and the Holder shall give
notice  to  the Company by facsimile within five (5) business days of receipt of
the  original  Notice  of  Conversion  Default  (with  the original delivered by
overnight  mail or two day courier) of its election to either nullify or confirm
the  Notice  of  Conversion.

     (i)     The  Company  agrees  to  pay  the Holder payments for a Conversion
Default  ("Conversion  Default Payments") in the amount of (N/365) multiplied by
..24  multiplied by the initial issuance price of the outstanding or tendered but
not  converted Convertible Debentures held by the Holder where N = the number of
days  from  the  Conversion  Default Date to the date (the "Authorization Date")
that  the  Company  authorizes  a sufficient number of shares of Common Stock to
effect  conversion  of  all remaining Convertible Debentures.  The Company shall
send  notice  ("Authorization  Notice")  to the Holder that additional shares of
Common  Stock  have  been  authorized, the Authorization Date, and the amount of
Holder's  accrued  Conversion  Default Payments.  The accrued Conversion Default
shall  be  paid  in  cash  or  shall  be  convertible  into  Common Stock at the
conversion  rate set forth in the first sentence of this paragraph, upon written
notice  sent  by  the  Holder  to the Company, which Conversion Default shall be
payable  as follows:  (i) in the event the Holder elects to take such payment in
cash,  cash  payments shall be made to the Holder  by the fifth (5th) day of the
following  calendar  month,  or  (ii)  in  the  event Holder elects to take such
payment  in  stock, the Holder may convert such payment amount into Common Stock
at  the conversion rate set forth in the first sentence of this paragraph at any
time  after  the  fifth  (5th)  day of the calendar month following the month in
which  the  Authorization  Notice  was  received,  until  the  expiration of the
mandatory  three  (3)  year  conversion  period.

     (j)     The  Company acknowledges that its failure to maintain a sufficient
number  of  authorized  but  unissued shares of Common Stock to effect in full a
conversion of the Convertible Debentures will cause the Holder to suffer damages
in  an  amount  that  will  be difficult to ascertain.  Accordingly, the parties
agree  that  it  is  appropriate  to  include  in this Agreement a provision for
liquidated  damages.  The  parties  acknowledge  and  agree  that the liquidated
damages  provision  set forth in this section represents the parties' good faith
effort  to quantify such damages and, as such, agree that the form and amount of
such  liquidated  damages are reasonable and will not constitute a penalty.  The
payment of liquidated damages shall not relieve the Company from its obligations
to deliver the Common Stock pursuant to the terms of this Convertible Debenture.

     (k)     If,  by  the  third (3rd) business day after the Conversion Date of
any portion of the Convertible Debentures to be converted (the "Delivery Date"),
the  transfer  agent  fails  for  any  reason  to  deliver the Common Stock upon
conversion  by the Holder and after such Delivery Date, the Holder purchases, in
an  open  market transaction or otherwise, shares of Common Stock (the "Covering
Shares")  solely  in  order to make delivery in satisfaction of a sale of Common
Stock  by the Holder (the "Sold Shares"), which delivery such Holder anticipated
to  make  using  the  Common  Stock  issuable  upon conversion (a "Buy-In"), the
Company  shall pay to the Holder, in addition to any other amounts due to Holder
pursuant  to  this  Convertible  Debenture,  and not in lieu thereof, the Buy-In
Adjustment  Amount  (as  defined  below).  The "Buy In Adjustment Amount" is the
amount  equal  to  the  excess, if any, of (x) the Holder's total purchase price
(including  brokerage  commissions, if any) for the Covering Shares over (y) the
net  proceeds  (after brokerage commissions, if any) received by the Holder from
the sale of the Sold Shares.  The Company shall pay the Buy-In Adjustment Amount
to  the  Holder  in immediately available funds within five (5) business days of
written  demand  by the Holder.  By way of illustration and not in limitation of
the  foregoing,  if  the  Holder purchases shares of Common Stock having a total
purchase  price  (including  brokerage commissions) of $11,000 to cover a Buy-In
with  respect to shares of Common Stock it sold for net proceeds of $10,000, the
Buy-In Adjustment Amount which the Company will be required to pay to the Holder
will  be  $1,000.

     (l)     The  Company shall defend, protect, indemnify and hold harmless the
Holder  and  all  of  its shareholders, officers, directors, employees, counsel,
and  direct  or  indirect  investors and any of the foregoing person's agents or
other  representatives  (including,  without  limitation,  those  retained  in
connection  with the transactions contemplated by this Agreement) (collectively,
the  "Section  4.3(h) Indemnitees") from and against any and all actions, causes
of  action,  suits,  claims,  losses,  costs,  penalties,  fees, liabilities and
damages,  and expenses in connection therewith (irrespective of whether any such
Section  4.3(h)  Indemnitee  is  a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the  "Section  4.3(h) Indemnified Liabilities"), incurred by any Section 4.3(h)
Indemnitee  as  a  result  of,  or  arising  out  of,  or  relating  to  (i) any
misrepresentation  or  breach  of  any  representation  or  warranty made by the
Company  in  the  Transaction  Documents or any other certificate, instrument or
document  contemplated  hereby  or  thereby,  (ii)  any  breach of any covenant,
agreement,  or  obligation of the Company contained in the Transaction Documents
or  any  other  certificate,  instrument,  or  document  contemplated  hereby or
thereby,  (iii) any cause of action, suit, or claim brought or made against such
Section  4.3(h) Indemnitee by a third party and arising out of or resulting from
the  execution,  delivery,  performance,  or  enforcement  of  the  Transaction
Documents  or any other certificate, instrument, or document contemplated hereby
or thereby, (iv) any transaction financed or to be financed in whole or in part,
directly  or  indirectly,  with the proceeds of the issuance of the Common Stock
underlying  the  Convertible  Debenture ("Securities"), or (v) the status of the
Holder or holder of the Securities as an investor in the Company, except insofar
as  any  such  misrepresentation, breach or any untrue statement, alleged untrue
statement,  omission,  or  alleged  omission  is  made  in  reliance upon and in
conformity  with  written  information furnished to the Company by the Holder or
the  Investor which is specifically intended by the Holder or the Investor to be
relied  upon  by  the  Company, including for use in the preparation of any such
registration  statement,  preliminary  prospectus, or prospectus, or is based on
illegal trading of the Common Stock by the Holder or the Investor. To the extent
that  the  foregoing  undertaking  by  the  Company may be unenforceable for any
reason,  the  Company  shall  make  the  maximum contribution to the payment and
satisfaction  of  each  of the Indemnified Liabilities that is permissible under
applicable  law.  The indemnity provisions contained herein shall be in addition
to  any  cause  of  action  or  similar  rights  the  Holder  may  have, and any
liabilities  the  Holder  may  be  subject  to.

Article  5     Additional  Financing  and  Registration  Statements

     Section  5.1     The  Company  will not enter into any additional financing
agreements,  debt  or  equity,  without prior expressed written consent from the
Holder,  which shall not be unreasonably withheld.  Failure to do so will result
in  an  Event of Default and the Holder may elect to take the action outlined in
Article  4.

     Section  5.2     The Company agrees that it shall not file any registration
statement  which  includes any of its Common Stock, including those on Form S-8,
until  such  time  as  the Face Amount is paid off in full ("Lock-Up Period") or
without  the  prior  written  consent  of  the  Holder.

     Section  5.3     The  Holder  shall also reserve the right to switch to the
terms of the new financing  If at any time while the Face Amount is outstanding,
if  the  Company  issues  or  agree  to  issue  any  common  stock or securities
convertible  into  or  exercisable for shares of commons stock (or modify any of
the  foregoing which may be outstanding) to any person or entity.  Additionally,
if the Company shall, issue or agree to issue any of the aforementioned services
to  any  person,  firm  or  corporation at terms deemed by the Holder to be more
favorable  to the other investor than the terms or conditions of this Agreement,
then the Holder is granted the right to modify any such term or condition of the
Agreement  to  be  the  same  as  any  such  term or condition of any subsequent
offering.  The  rights  of  the  Holder in this Section 5 are in addition to any
other right the Holder has pursuant to this Agreement and the Security Agreement
of  even  date  between  the  Holder  and  the  Company.

     Section 5.4     The Company agrees that any and all its officers, insiders,
affiliates or other related parties shall refrain from selling any Stock, during
the  Lock-Up  Period.

Article  6     Notice.

     Any  notices,  consents,  waivers  or  other  communications  required  or
permitted  to  be given under the terms of this Agreement must be in writing and
will  be  deemed  to  have  been  delivered  (i)  upon  receipt,  when delivered
personally;  (ii)  upon receipt, when sent by facsimile (provided a confirmation
of  transmission is mechanically or electronically generated and kept on file by
the  sending  party);  or  (iii)  one  (1)  day  after deposit with a nationally
recognized  overnight  delivery  service, in each case properly addressed to the
party  to  receive  the  same.  The  addresses  and  facsimile  numbers for such
communications  shall  be:

If  to  the  Company:

     Laurie  Phillips
     Xtreme  Companies,  Inc.
     300  Westlink  Dr
     Washington,  MO  36090
     Telephone:  (636)  390-9000
     Facsimile:  (636)  390-2556

If  to  the  Holder:

     Dutchess  Capital  Management
     Douglas  Leighton
     50  Commonwealth  Ave  Suite  2
     Boston,  MA  02116
     Phone:  617-301-4700
     Facsimile:  617-249-0947

     Each  party  shall provide five (5) business days prior notice to the other
party  of  any  change  in  address,  phone  number  or  facsimile  number.

Article  7     Time

     Where  this  Agreement  authorizes  or requires the payment of money or the
performance  of  a  condition  or obligation on a Saturday or Sunday or a public
holiday,  or authorizes or requires the payment of money or the performance of a
condition or obligation within, before or after a period of time computed from a
certain date, and such period of time ends on a Saturday or a Sunday or a public
holiday,  such  payment  may be made or condition or obligation performed on the
next  succeeding  business day, and if the period ends at a specified hour, such
payment  may  be made or condition performed, at or before the same hour of such
next  succeeding  business  day,  with  the  same force and effect as if made or
performed  in  accordance  with  the  terms of this Agreement.  A "business day"
shall  mean  a day on which the banks in New York are not required or allowed to
be  closed.

Article  8     No  Assignment

     This  Agreement  and  the  terms  and  conditions  herein,  shall  not  be
assignable.

Article  9     Rules  of  Construction.

     In  this  Agreement,  unless  the  context otherwise requires, words in the
singular  number include the plural, and in the plural include the singular, and
words  of the masculine gender include the feminine and the neuter, and when the
sense  so  indicates,  words  of the neuter gender may refer to any gender.  The
numbers  and  titles  of  sections  contained  in the Agreement are inserted for
convenience  of  reference  only, and they neither form a part of this Agreement
nor are they to be used in the construction or interpretation hereof.  Wherever,
in  this  Agreement, a determination of the Company is required or allowed, such
determination  shall  be  made  by  a  majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding upon
the  Company  and  the  Holder  of  this  Agreement.

Article  10     Governing  Law

     The validity, terms, performance and enforcement of this Agreement shall be
governed  and construed by the provisions hereof and in accordance with the laws
of  the  Commonwealth  of  Massachusetts  applicable  to  agreements  that  are
negotiated,  executed,  delivered  and  performed  solely  in  the  State  of
Massachusetts.

Article  11     Litigation

     The  parties  to this agreement will submit all disputes arising under this
agreement  to arbitration in Boston, Massachusetts before a single arbitrator of
the  American Arbitration Association ("AAA").  The arbitrator shall be selected
by  application  of the rules of the AAA, or by mutual agreement of the parties,
except that such arbitrator shall be an attorney admitted to practice law in the
Commonwealth  of  Massachusetts.  No  party to this agreement will challenge the
jurisdiction  or venue provisions as provided in this section.   Nothing in this
section  shall  limit the Holder's right to obtain an injunction for a breach of
this  Agreement  from  a  court  of  law.

Article  12      Conditions  to  Closing

     The Company shall have delivered the proper Collateral to the Holder before
Closing.

Article  13     Structuring  and  Administration  Expense

     The Company agrees to pay for related expenses associated with the proposed
transaction  of  $20,000.  This  amount  shall cover, but is not limited to, the
following:  due  diligence  expenses, document creation expenses, closing costs,
and  transaction  administration expenses. This shall be deducted from the first
closing.

Article  16      Indemnification

     In  consideration  of the Holder's execution and delivery of this Agreement
and  the  acquisition and funding by the Holder hereunder and in addition to all
of  the Company's other obligations under the documents contemplated hereby, the
Company shall defend, protect, indemnify and hold harmless the Holder and all of
their  shareholders,  officers,  directors,  employees,  counsel,  and direct or
indirect  investors  and  any  of  the  foregoing  person's  agents  or  other
representatives  (including,  without  limitation,  those retained in connection
with  the  transactions  contemplated  by  this  Agreement)  (collectively,  the
"INDEMNITEES")  from  and  against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection  therewith (irrespective of whether any such Indemnitee is a party to
the  action  for  which  indemnification  hereunder  is  sought),  and including
reasonable  attorneys'  fees  and disbursements (the "INDEMNIFIED LIABILITIES'),
incurred by any Indemnitee as a result of, or arising out of, or relating to (i)
any  misrepresentation  or  breach of any representation or warranty made by the
Company  in  the  Agreement,  or  any  other certificate, instrument or document
contemplated  hereby  or  thereby  (ii) any breach of any covenant, agreement or
obligation  of  the Company contained in the Agreement or any other certificate,
instrument  or  document  contemplated  hereby or thereby, except insofar as any
such  misrepresentation,  breach  or  any  untrue  statement,  alleged  untrue
statement,  omission  or  alleged  omission  is  made  in  reliance  upon and in
conformity  with  written  information furnished to the Company by, or on behalf
of,  the  Holder or based on illegal or alleged illegal trading of the Shares by
the  Holder.  To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the  payment  and  satisfaction  of each of the Indemnified Liabilities which is
permissible  under  applicable  law.  The  indemnity provisions contained herein
shall  be  in  addition  to any cause of action or similar rights the Holder may
have,  and  any  liabilities  the  Holder  may  be  subject  to.

Article  17     Waiver

     The  Holder's  delay  or  failure at any time or times hereafter to require
strict performance by Company of any undertakings, agreements or covenants shall
not  waiver, affect, or diminish any right of the Holder under this Agreement to
demand  strict  compliance and performance herewith. Any waiver by the Holder of
any  Event  of  Default  shall  not  waive or affect any other Event of Default,
whether  such Event of Default is prior or subsequent thereto and whether of the
same  or a different type. None of the undertakings, agreements and covenants of
the  Company  contained  in  this  Agreement,  and no Event of Default, shall be
deemed  to  have  been  waived by the Holder, nor may this Agreement be amended,
changed  or  modified,  unless such waiver, amendment, change or modification is
evidenced  by an instrument in writing specifying such waiver, amendment, change
or  modification  and  signed  by  the  Holder.

Article  18     Senior  Obligation

     The  Company  shall  cause this Agreement ("Holder's Debt") to be senior in
right  of  payment  to all other Indebtedness of the Company for the Collateral.

Article  19     Transactions  With  Affiliates

     The  Company  shall  not,  and shall cause each of its Subsidiaries not to,
enter into, amend, modify or supplement, or permit any Subsidiary to enter into,
amend,  modify  or  supplement,  any  agreement,  transaction,  commitment  or
arrangement with any of its or any Subsidiary's officers, directors, persons who
were  officers  or  directors  at  any  time  during  the  previous  two  years,
shareholders who beneficially own five percent (5%) or more of the Common Stock,
or  affiliates  or with any individual related by blood, marriage or adoption to
any  such  individual  or with any entity in which any such entity or individual
owns  a  five  percent (5%) or more beneficial interest (each a "Related Party")
during  the  Lock  Up  Period

Article  20     Security

     The Holder shall have full right to funds due to the Company from the boats
listed on Exhibit A.  In the Event of Default the Holder shall have the right to
attach  any  other  assets  as  outlined  in  Article  4.

Article  21     Miscellaneous

a.     All  pronouns  and  any variations thereof used herein shall be deemed to
refer  to  the  masculine,  feminine,  impersonal,  singular  or  plural, as the
identity  of  the  person  or  persons  may  require.

b.     Neither  this  Agreement  nor  any  provision  hereof  shall  be  waived,
modified,  changed,  discharged,  terminated,  revoked or canceled, except by an
instrument  in  writing  signed by the party effecting the same against whom any
change,  discharge  or  termination  is  sought.

c.     Notices  required  or permitted to be given hereunder shall be in writing
and  shall  be deemed to be sufficiently given when personally delivered or sent
by  facsimile  transmission:  (i) if to the Company, at its executive offices or
(ii)  if  to  the  Holder,  at  the  address for correspondence set forth in the
Article 6, or at such other address as may have been specified by written notice
given  in  accordance  with  this  paragraph.

d.     This  Agreement may be executed in two or more counterparts, all of which
taken  together shall constitute one instrument.  Execution and delivery of this
Agreement  by  exchange of facsimile copies bearing the facsimile signature of a
party  shall  constitute  a  valid  and  binding  execution and delivery of this
Agreement  by  such  party.  Such  facsimile copies shall constitute enforceable
original  documents.

e.     This Written Agreement represent the FINAL AGREEEMENT between the Company
and  the  Holders  and  may  not  be  contradicted  by  evidence  of  prior,
contemporaneous,  or  subsequent  oral  agreements  of the parties, there are no
unwritten  oral  agreements  among  the  parties.

f.     The  execution, delivery and performance of this Agreement by the Company
and  the consummation by the Company of the transactions contemplated hereby and
thereby will not (i) result in a violation of the Articles of Incorporation, any
Certificate of Designations, Preferences and Rights of any outstanding series of
preferred  stock  of  the  Company  or  the  By-laws  or  (ii) conflict with, or
constitute a material default (or an event which with notice or lapse of time or
both  would  become  a  material default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
contract, indenture mortgage, indebtedness or instrument to which the Company or
any  of  its Subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree, including United States federal and state
securities  laws  and regulations and the rules and regulations of the principal
securities  exchange  or  trading  market on which the Common Stock is traded or
listed  (the  "Principal  Market"),  applicable  to  the  Company  or any of its
Subsidiaries  or  by  which  any  property or asset of the Company or any of its
Subsidiaries  is  bound or affected. Neither the Company nor its Subsidiaries is
in violation of any term of, or in default under, the Articles of Incorporation,
any  Certificate  of  Designations,  Preferences  and  Rights of any outstanding
series  of preferred stock of the Company or the By-laws or their organizational
charter  or  by-laws,  respectively,  or  any  contract,  agreement,  mortgage,
indebtedness,  indenture,  instrument, judgment, decree or order or any statute,
rule  or  regulation  applicable  to the Company or its Subsidiaries, except for
possible  conflicts,  defaults,  terminations,  amendments,  accelerations,
cancellations  and  violations  that  would not individually or in the aggregate
have a Material Adverse Effect. The business of the Company and its Subsidiaries
is  not  being  conducted,  and shall not be conducted, in violation of any law,
statute,  ordinance,  rule, order or regulation of any governmental authority or
agency,  regulatory  or  self-regulatory  agency,  or court, except for possible
violations the sanctions for which either individually or in the aggregate would
not  have  a Material Adverse Effect.  The Company is not required to obtain any
consent,  authorization,  permit or order of, or make any filing or registration
(except  the  filing of a registration statement)  with, any court, governmental
authority  or  agency, regulatory or self-regulatory agency or other third party
in  order for it to execute, deliver or perform any of its obligations under, or
contemplated  by, this Agreement in accordance with the terms hereof or thereof.
All  consents,  authorizations, permits, orders, filings and registrations which
the  Company  is required to obtain pursuant to the preceding sentence have been
obtained  or  effected  on or prior to the date hereof and are in full force and
effect  as  of  the date hereof. The Company and its Subsidiaries are unaware of
any  facts  or  circumstances which might give rise to any of the foregoing. The
Company is not, and will not be, in violation of the listing requirements of the
Principal  Market  as  in  effect  on the date hereof and on each of the Closing
Dates  and is not aware of any facts which would reasonably lead to delisting of
the  Common  Stock  by  the  Principal  Market  in  the  foreseeable  future.


g.     The  Company and its "Subsidiaries" (which for purposes of this Agreement
means  any  entity  in  which  the Company, directly or indirectly, owns capital
stock  or  holds  an equity or similar interest) are corporations duly organized
and  validly  existing  in  good  standing  under  the  laws  of  the respective
jurisdictions of their incorporation, and have the requisite corporate power and
authorization  to  own  their  properties  and to carry on their business as now
being  conducted. Both the Company and its Subsidiaries are duly qualified to do
business and are in good standing in every jurisdiction in which their ownership
of  property  or  the  nature  of  the  business  conducted  by  them makes such
qualification  necessary,  except  to  the  extent  that  the  failure  to be so
qualified  or  be  in good standing would not have a Material Adverse Effect. As
used  in  this  Agreement,  "Material Adverse Effect" means any material adverse
effect  on  the business, properties, assets, operations, results of operations,
financial  condition  or  prospects of the Company and its Subsidiaries, if any,
taken  as  a  whole,  or  on  the  transactions  contemplated  hereby  or by the
agreements  and instruments to be entered into in connection herewith, or on the
authority  or  ability  of  the  Company  to  perform  its obligations under the
Agreement.

h.     Authorization;  Enforcement;  Compliance with Other Instruments.  (i) The
Company  has  the  requisite  corporate  power  and  authority to enter into and
perform  this Agreement, and to issue the Agreement in accordance with the terms
hereof  and  thereof,  (ii)  the  execution and delivery of the Agreement by the
Company  and  the consummation by it of the transactions contemplated hereby and
thereby,  have  been  duly  and  validly  authorized  by  the Company's Board of
Directors  and  no  further consent or authorization is required by the Company,
its  Board  of Directors, or its shareholders, (iii) the Agreement has been duly
and  validly  executed  and  delivered  by  the  Company, and (iv) the Agreement
constitutes the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited  by  general  principles of equity or applicable bankruptcy, insolvency,
reorganization,  moratorium,  liquidation  or  similar  laws  relating  to,  or
affecting  generally,  the  enforcement  of  creditors'  rights  and  remedies.

I.     The  execution  and  delivery of this Agreement shall not alter any prior
written  agreements  between  the  Company  and  the  Holder.

j.      There are no disagreements of any kind presently existing, or reasonably
anticipated  by  the  Company to arise, between the Company and the accountants,
auditors  and  lawyers  formerly or presently employed by the Company, including
but  not limited to disputes or conflicts over payment owed to such accountants,
auditors  or  lawyers.

k.     All  representations  made  by or relating to the Company of a historical
nature  and  all  undertaking  described  herein  shall  relate and refer to the
Company,  its  predecessors,  and  the  Subsidiaries.

l.     The only officer, director, employee and consultant stock option or stock
incentive  plan  currently  in  effect  or  contemplated by the Company has been
submitted  to  the  Holder  or is described with Reports.  No other plan will be
adopted  nor  may  any  options.

<PAGE>

     IN  WITNESS WHEREOF, the Company has duly executed this Debenture as of the
date  first  written  above.

                                XTREME COMPANIES


                              Laurie  A.  Phillips
                              --------------------


       /s/Laurie  Phillips
       -------------------
 Name: Laurie  Phillips
Title: Chief  Executive  Officer


                              DUTCHESS  PRIVATE  EQUITIES  FUND,  II,  L.P.
                              BY  ITS  GENERAL  PARTNER  DUTCHESS
                              CAPITAL  MANAGEMENT,  LLC



        /s/Douglas  H.  Leighton
        ------------------------
 Name:  Douglas  H.  Leighton
Title:  A  Managing  Member


<PAGE>
                                    EXHIBIT A

                            CHALLENGER OFFSHORE BOATS
                         ATTACHED TO FACTORING AGREEMENT


<TABLE>
<CAPTION>



<S>     <C>                 <C>                        <C>                   <C>
          APPROX INVOICE/                              $ AVAILABLE TO APPLY
BOAT #  PYMT FROM CUSTOMER   APPROX. LOAN PAYMENT DUE    TO FACTOR BALANCE                   COMMENT
109     $         138,000   $                 102,000  $            36,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
110     $          82,000   $                  62,000  $            20,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
115     $         120,000   $                  78,000  $            42,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
119     $          45,000   N/A                        $            45,000
------  ------------------  -------------------------  --------------------  ------------------------------------
120     $          75,000   $                  30,000  $            45,000   Remaining $after Happy Apple loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
125     $         130,000   N/A                        $           130,000
------  ------------------  -------------------------  --------------------  ------------------------------------
126     $         120,000   N/A                        $           120,000
------  ------------------  -------------------------  --------------------  ------------------------------------
129     $         140,000   $                  55,000  $            85,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
Philly
Fire    $          60,000   $                  28,000  $            32,000   Remaining $after WIP loan is paidoff
------  ------------------  -------------------------  --------------------  ------------------------------------
CT Fire $          36,750   N/A                        $            36,750
------  ------------------  -------------------------  --------------------  ------------------------------------
Cpt
Morgan  $         100,000   N/A                        $           100,000
------  ------------------  -------------------------  --------------------  ------------------------------------
TOTAL   $         966,750   $                 293,000  $           673,750
------  ------------------  -------------------------  --------------------  ------------------------------------
</TABLE>

All  amounts  are  approximate.  Any  monies  received  from customers for above
listed  boats  must  first  be  applied to outstanding WIP loans at Sun Security
or  applied against the Happy Apple loan, where noted.  Xtreme agrees to forward
all  remaining  monies  to  Dutchess.

We,  the  Company, do hereby agree to assign the above Receivables as Collateral
as  defined  in  Section  2  of the Receivable Factoring Agreement above, and do
hereby, agree to make such payments to Holder from these Receivables as outlined
in  the  Agreement.  We, the Company, realize that failure to make payments from
the  above Receivables to the Holder as outlined in the Agreement will result in
an  Event  of  Default  as outlined in Article 4 and the Holder may take actions
against  the  Company.


 /s/Laurie  A.  Phillips
 --------------------
 Laurie  Phillips,  CEO